Acquisition Reform: DOD Begins Program to Reform Specifications and
Standards (Letter Report, 10/11/94, GAO/NSIAD-95-14).

Pentagon officials consider acquisition reform an imperative, and they
view eliminating unnecessary reliance on military specifications and
standards as critical to this effort. However, the Defense Department
(DOD) has been trying to reduce its reliance on military specifications
and standards for more than 20 years with only modest success. DOD has
developed a new reform program, which the military services and DOD
agencies were directed in June 1994 to implement. This report presents
the results of GAO's self-initiated review of this key aspect of
acquisition reform. GAO discusses whether the current program (1) goes
further than earlier attempts to advance military specifications and
standards reform and (2) gives adequate attention to key issues and
concerns.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-14
     TITLE:  Acquisition Reform: DOD Begins Program to Reform 
             Specifications and Standards
      DATE:  10/11/94
   SUBJECT:  Defense contingency planning
             Defense cost control
             Procurement evaluation
             Defense budgets
             Defense procurement
             Military inventories
             Procurement policies
             Restrictive specifications
             Human resources training
IDENTIFIER:  Defense Standardization Program
             
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Cover
================================================================ COVER


Report to Congressional Committees

October 1994

ACQUISITION REFORM - DOD BEGINS
PROGRAM TO REFORM SPECIFICATIONS
AND STANDARDS

GAO/NSIAD-95-14

Acquisition Reform


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  OSD - Office of the Secretary of Defense
  PAT - Process Action Team

Letter
=============================================================== LETTER


B-258148

October 11, 1994

The Honorable John Glenn
Chairman
The Honorable William V.  Roth, Jr.
Ranking Minority Member
Committee on Governmental Affairs
United States Senate

The Honorable Sam Nunn
Chairman
The Honorable Strom Thurmond
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable John Conyers
Chairman
The Honorable William F.  Clinger, Jr.
Ranking Minority Member
Committee on Government Operations
House of Representatives

The Honorable Ronald V.  Dellums
Chairman
The Honorable Floyd Spence
Ranking Minority Member
Committee on Armed Services
House of Representatives

During the past year, the Congress and the Department of Defense
(DOD) have spent significant time and resources on acquisition reform
and in promoting the use of commercial products and processes.  DOD
has taken the lead in an area of acquisition reform where statutory
changes are not required.  Specifically, DOD has developed a program
to reform military specifications and standards.  On June 29, 1994,
the Secretary of Defense directed the services and DOD agencies to
implement this new program. 

DOD officials consider acquisition reform as an imperative, and they
view eliminating unnecessary reliance on military specifications and
standards as critical to this reform.  However, DOD has been trying
to reduce its reliance on military specifications and standards for
over 20 years with only modest success.  Accordingly, we are
providing the cognizant congressional committees with the results of
our self-initiated review of this key aspect of acquisition reform. 
Specifically, we reviewed whether the current program (1) goes
further than prior attempts to advance military specifications and
standards reform and (2) gives adequate attention to key issues and
concerns. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The military and political changes occurring after the Cold War era
have resulted in the need for change in U.S.  military forces and the
acquisition system that supports them.  DOD's acquisition reform
program was established to reduce acquisition costs while maintaining
technological superiority.  The goal is to move away from buying
items made to comply with unique DOD specifications, terms, and
conditions and toward buying commercial products or products made
using commercial practices.  The intent is to further integrate the
U.S.  defense and commercial industrial bases.  DOD's use of
military-unique specifications and standards has been cited in
several reports as a major barrier to this acquisition reform goal. 

In general, "military specifications" describe the physical and or
operational characteristics of a product and "military standards"
detail the processes and materials to be used to make the product. 
The standards can also describe how to manage the manufacturing and
testing of a part.  For example, a specification might describe the
kind of wire to be used in an electrical circuit and a standard might
describe how the wire is to be fastened in a circuit and what tests
should be conducted on the circuit.  Military specifications and
standards, collectively referred to as "milspecs," are a major part
of DOD's Standardization Program, which seeks to limit variety in
purchased items by stipulating certain design details.  Some
principal purposes for milspecs have been to (1) ensure
interoperability between products, (2) provide products that can
perform in extreme conditions, (3) protect against contractor fraud,
and (4) promote greater opportunities for competition among
contractors. 

Many studies over the past 20 years have attempted to redirect the
milspec system.  In general, these studies have recognized that
although milspecs are required, DOD's milspec process was complex,
and often rigid, and blocked the use of commercial products and
processes.  These studies have repeatedly presented a number of the
same issues and recommendations. 

Although DOD has made some progress in decreasing reliance on
milspecs, in August 1993, the Deputy Under Secretary of Defense for
Acquisition Reform directed that a process action team (PAT) be
established to revisit milspec reform.  The PAT was to develop (1) a
comprehensive plan to ensure that DOD describes its needs in ways
that permit maximum reliance on existing commercial items, practices,
processes, and capabilities, and (2) an assessment of the impact of
the recommended actions on the acquisition process. 

The April 1994 PAT report entitled Blueprint for Change:  Report of
the Process Action Team on Military Specifications and Standards is
the foundation for DOD's current milspec reform program.  Appendix I
lists the 24 recommendations from the report and highlights the
13 recommendations identified as principal ones.  On June 23, 1994,
DOD published an implementation plan for the reform program.  In a
June 29, 1994, memorandum, the Secretary of Defense officially
accepted the PAT report and directed the services and DOD agencies to
take immediate action to implement the recommendations.  These three
documents--the report, the plan, and the memorandum--are the basis of
DOD's current efforts to reform milspecs. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

DOD's current milspec reform program builds on previous studies. 
Although many of the recommendations are essentially the same as
those in earlier reports, the current program goes further than
previous efforts because it includes more details for implementation. 
While the implementation strategy is still being refined, officials
in the Office of the Secretary of Defense (OSD) stated that the June
1994 implementation plan is the first step in a long-range, iterative
process.  Major buying commands and centers are to present plans by
November 1994 that should provide further implementation details. 

The current milspec reform effort focuses on changing the acquisition
culture and contains several actions intended to accomplish this
change.\1 These include (1) ensuring long-term, top-management
support; (2) providing training to the affected workforce; (3)
securing adequate funding and personnel resources; and (4)
establishing incentives for desired behavior.  These actions have
been used successfully by some commercial companies to promote
cultural change. 

To achieve the major cultural change desired, DOD will need
acceptance and support of the milspec reform program throughout the
military acquisition community, including both DOD's and contractors'
offices.  Achieving this acceptance and support could become more
difficult without (1) improved data on the benefits of implementing
the recommended actions; (2) better focus on areas with the greatest
opportunities for benefits; and (3) adequate indicators, referred to
by DOD as metrics, to measure progress toward intended goals.  DOD
officials have acknowledged difficulties in these areas and indicated
that actions would be taken to address these shortcomings as program
implementation continues. 


--------------------
\1 "Culture" may be defined as the underlying assumptions, beliefs,
values, attitudes, and expectations shared by an organization's
members. 


   PROGRAM GOES FURTHER THAN PRIOR
   EFFORTS
------------------------------------------------------------ Letter :3

DOD's current milspec reform program is directed toward reducing
government involvement in the detailed management of acquisitions so
that appropriate opportunities will be taken to use commercial
products and processes.  Examples of the program's direction can be
seen by such recommendations as streamlining government oversight and
inspection, encouraging contractors to offer alternatives to
milspecs, expecting the use of performance-based milspecs, and
requiring waivers to use milspecs when no alternative is available. 
This program is based on essentially the same recommendations
contained in earlier reports addressing milspec reform.  However, the
PAT report goes further than previous efforts, as it includes more
details for implementation, and additional steps were taken in June
1994, when DOD issued its implementation plan. 


      MOST RECOMMENDATIONS ARE NOT
      NEW
---------------------------------------------------------- Letter :3.1

The fact that most recommendations in the current program to reform
milspecs are not new is not surprising because the PAT primarily
relied on prior reports for its analysis.  Also, as noted in an
earlier study, the milspec area has been analyzed many times and
"there is literally nothing new under the sun." In our review of
eight prior milspec and acquisition reform reports issued since 1977
(listed in app.  II), we identified similar recommendations for 17 of
the 24 recommendations in the PAT report, including 10 of the 13
principal ones.  For example, at least six of the prior reports
contained recommendations similar to the PAT recommendations for
training, developing nongovernment standards, and automating the
development of milspecs.  Of the seven new recommendations, four were
milspec recommendations related to oversight, contractor test and
inspection, pollution prevention, and corporate information
management for acquisition.  The remaining three were not recognized
by DOD as milspec issues and were not addressed by the implementation
plan or the Secretary's memorandum. 

Not only are most of the recommendations not new, but some of the
recommended tasks are already stated in DOD or service policy.  For
example, one major PAT recommendation is to use performance
specifications; however, according to DOD and service officials, the
preference for performance specifications has existed for several
years.  In regard to another recommendation, DOD policy already
directs adoption of all nongovernment standards currently used in
DOD.  Furthermore, the DOD Inspector General's Office, in comments on
the PAT draft report, indicated that the services' or defense
agencies' policies have either encouraged or required actions similar
to five of the recommended tasks to eliminate excessive contract
requirements. 

Additionally, some DOD locations had undertaken actions that are
comparable to tasks recommended in the PAT report.  For example, the
Army's Armament, Munitions, and Chemical Command and its Test and
Evaluation Command reported that in a 10-month period, they saved $42
million in test and inspection costs, with most savings resulting
from the use of process controls.  Process controls were recommended
in the PAT report. 


      PAT REPORT FACILITATES
      PROGRAM IMPLEMENTATION
---------------------------------------------------------- Letter :3.2

DOD's current milspec program addresses many aspects of developing
and applying milspecs and identifies tasks that need to be
accomplished.  This can be attributed, in part, to the fact that the
PAT report developed more detailed plans for implementation than most
of the prior reports.  In addition to identifying tasks for each
recommendation, the report identified risks, barriers, possible
benefits and disadvantages, resources, timeframes, responsible
organizations, and progress indicators associated with the
recommendations.  For example, one principal recommendation is to
establish Standards Improvement Executives that have the authority
and resources to implement an improvement program in each service and
defense agency.  For this recommendation, the report identifies

  six tasks for implementation, such as appointing the Executives by
     a specified date and developing a separate budget line item for
     the funding they control;

  a risk to successful implementation, the concern that adequate
     resources might be unavailable;

  a barrier, the failure of past DOD leadership to demonstrate
     long-term commitment to the milspecs improvement program;

  benefits, such as helping foster cultural change, and
     disadvantages, such as creating another DOD power base;

  estimated costs of about $269 million for the entire milspecs
     improvement program over 6 fiscal years starting in 1994; and

  time frames for the tasks. 

In June 1994, a Report Implementation Group--consisting of
representatives from OSD, the services, and the Defense Logistics
Agency--met and developed DOD's implementation plan.  The plan
addresses an approach for ensuring that the infrastructure and
resources required for reform are in place.  A key feature of the
plan is that each major buying command and center is required to
provide a draft of its own implementation plan to its service/agency
by the end of October 1994, with final submittal by the end of
November 1994.  Additionally, to help ensure stable milspecs
improvement funding and provide management oversight, the plan
envisions that the Assistant Secretary of Defense (Economic Security)
work with the DOD Comptroller to create a common program element for
each service's budget. 

Some PAT report recommendations were not viewed as directly related
to milspec reform and were not addressed by the implementation group. 
Also, the group did not address some other implementing tasks.  For
example, the task to establish memorandums of understanding with
industry was set aside because the PAT had provided no data on the
benefits of this task and the implementation group questioned the
value.  In another case, a recommended task--canceling or
inactivating standards identified by industry as problems--was
temporarily suspended by the group pending the completion of an
additional analysis. 

According to OSD officials, the implementation plan is simply the
first step in a long-range, iterative process.  We were told that the
implementation plan reflects current thinking and that the plan is to
be updated periodically to reflect progress, issues, and new
directions.  Officials said that in 6 months the group will revisit
the plan and update it. 


   PROGRAM FOCUSES ON CHANGING THE
   ACQUISITION CULTURE
------------------------------------------------------------ Letter :4

The major focus of the current milspec reform program is on changing
DOD's acquisition culture.  Specifically, the PAT's recommendations
and implementing tasks, the subsequent implementation plan, and the
Secretary of Defense's memorandum all address the need to change
DOD's acquisition culture.  We previously reported that the inability
to change the culture has thwarted reform.\2 The PAT report goes
beyond identifying the need for cultural changes and addresses
several elements in a cultural change program, including (1)
leadership, (2) training, (3) resources, and (4) incentives for
desired behavior.  In a February 1992 report,\3 we stated that such
elements, especially top management commitment and training, have
been successfully used in the private sector to change organizational
culture.  However, we also noted that experts believe that a culture
change is a long-term effort that takes at least 5 to 10 years to
complete. 


--------------------
\2 Weapons Acquisition:  A Rare Opportunity for Lasting Change
(GAO/NSIAD-93-15, Dec.  1992). 

\3 Organizational Culture:  Techniques Companies Use to Perpetuate or
Change Beliefs and Values (GAO/NSIAD-92-105, Feb.  27, 1992). 


      LEADERSHIP IS REQUIRED
---------------------------------------------------------- Letter :4.1

DOD officials and prior studies have stated that past milspec reform
initiatives were not fully successful because top management did not
participate personally in the process and provide the required
leadership.  For example, in an overview of prior milspec
initiatives, a 1993 report stated that personal involvement of DOD
management has worked, and hands-off, directive-type management has
not.  The Secretary of Defense, in signing the memorandum to
implement the reform program, stated that the current senior
leadership is committed to ensuring that acquisition reform changes
will be accepted and institutionalized.  DOD officials said that this
is the first time that such support has existed prior to beginning a
milspec reform effort.  The PAT report and the Secretary's memorandum
stipulate that OSD management and other acquisition leaders must take
an ongoing and proactive role in reinforcing the acquisition reform
message of which milspecs is only one component.  According to the
PAT report, senior DOD management has a major role in establishing
the environment essential for cultural change by, among other things,
participating in the implementation process. 

Leadership is also required to ensure that top-level officials
designated to carry out the reforms have the authority and resources
to implement the program.  For example, some of the prior reports
have noted that the problem is not in assigning reform
responsibilities to designated officials, but in ensuring that these
officials have the required authority and resources.  The most likely
candidate to carry forward a reform agenda--the Standards Improvement
Executive--has often been removed from the acquisition
decision-making process.  As described earlier, the PAT recommends
giving these Executives the authority needed to effect desired
reform.  As required in the implementation plan and the Secretary's
memorandum, Standards Improvement Executives were appointed in July
1994 to participate in the Defense Standards Improvement Council. 
The Council is to oversee the implementation of, provide direction
to, and resolve issues in the milspec reform program.  Among other
things, the Secretary's memorandum required the Council to report
directly to the Assistant Secretary for Economic Security and
directed that actions be taken to budget funds for the program. 
However, whether such changes will give these officials the authority
and resources needed for milspec reform is yet to be determined. 


      TRAINING IDENTIFIED AS KEY
      TO SUCCESS
---------------------------------------------------------- Letter :4.2

The PAT report cites training as "the linchpin of cultural change,
providing new skills and knowledge to implement a new acquisition
paradigm." The majority of the report's recommendations either
included tasks to provide training or cited the need for training to
overcome cultural barriers.  While training has been recommended in
most prior milspec reform reports, the current emphasis on training
appears more extensive and is intended to include more personnel in
training programs.  Past training recommendations primarily addressed
classroom training.  The current recommendations require continuous,
rather than one-time training, for all levels and includes many
delivery systems in addition to classroom training to reach the
personnel responsible for implementation.  Examples include such
media as video tapes of speeches and interviews by top OSD and
service leaders, video conferences, correspondence courses,
computer-based instruction, and road shows (in which senior
acquisition personnel go on-site to the workforce to sell the need
for changes and answer questions).  While some of the training is
focused on demonstrating the need for change, other training is to
provide instruction on specific skills and capabilities such as
developing and applying performance specifications, conducting market
research, or obtaining quality assurance with reduced government
oversight. 

The PAT report estimated training costs at about $13 million over 6
years, starting in 1994.  This was to be in addition to training
already funded within existing budgets for the Defense Acquisition
University.  We were told that (1) the amounts in the report are
estimates and are not based on detailed analysis and (2) the services
are developing details for budget submissions.  The implementation
plan does not add substantive details on training to the PAT report. 
However, one possibly significant difference between the two is that
the implementation plan does not require that training related to
milspec reform be a mandatory part of career progression for all
appropriate acquisition personnel as the PAT recommended.  This could
serve to decrease some of the importance of new training. 


      RESOURCES NEEDED FOR MILSPEC
      REFORM
---------------------------------------------------------- Letter :4.3

The PAT and prior efforts have stated that personnel and funding are
crucial resources to the success of the recommended actions.  The PAT
reports that one way of ensuring reform is to develop a joint milspec
budget with individual service/agency line items to control funds
needed for implementing initiatives.  Four of the eight prior reports
we analyzed also recognized the need for separate funding to
accomplish milspec recommendations. 

Currently, the funding and personnel responsible for developing and
maintaining milspecs used by DOD are decentralized with OSD providing
overall policy and guidance.  As a result, local commanders where
standardization activities are located control the resources and can
reduce standardization efforts to free funds and personnel for other
tasks considered more important.  In our field visits we noted
examples of reductions in resources for milspec functions because of
other work priorities.  We were told that the personnel situation
could intensify as the DOD acquisition workforce continues to shrink. 
Reportedly, the workforce has been reduced by 23 percent, or 134,000
jobs, since 1988. 

The PAT report estimated that total additional funding required to
implement the recommendations would be as shown in table 1. 



                           Table 1
           
               PAT's Report Estimate of Funding
                  Required to Implement Its
                       Recommendations

                    (Dollars in millions)

                                                        Time
Category                                 Funding     frame\a
--------------------------------------  --------  ----------
Automation                                   $81     1994-99
Manufacturing and management milspecs         16     1994-96
National standards                             6     1994-98
Obsolete specifications                        3     1994-98
DOD Standardization Program\b                269     1994-99
Training and education                        13     1994-99
============================================================
Subtotal                                    $388
Less funding already provided                188
============================================================
Total additional funds required             $200
------------------------------------------------------------
\a Because time frames vary, funds for individual categories are not
comparable. 

\b This program, which is under the direction of the Standards
Improvement Executives, will provide funds for writing, reviewing,
and maintaining milspecs and other documents such as commercial item
descriptions and nongovernment standards. 

PAT officials told us that the implementation estimates were very
rough, and they could not provide support for them.  The Secretary of
Defense's implementing memorandum does not address the amount of
funds that might be required.  It requires the Under Secretary of
Defense (Acquisition and Technology) to arrange for funds needed in
fiscal years 1994 and 1995 to efficiently implement the PAT report
and directs the services to program funding for fiscal year 1996 and
beyond.  DOD and service officials told us that providing funds to
carry out recommendations or ensuring that funds will be available
for milspec functions will be difficult.  As noted in earlier
reports, lack of adequate funding was a problem in other milspec
reform efforts. 

Furthermore, because of reductions in the DOD acquisition workforce,
personnel authorizations could become as critical, if not more
critical to milspec reform as funding.  For example, the
implementation plan pointed out that the Air Force, even with
adequate funds, might have difficulty implementing the
recommendations due to personnel ceilings.  All DOD organizations
might experience such difficulty because DOD is implementing the
Federal Workforce Restructuring Act of 1994 by establishing work year
ceilings on civilian personnel levels. 


      REPORT DISCUSSES INCENTIVES
      FOR CHANGE
---------------------------------------------------------- Letter :4.4

One way the program recommends achieving cultural change is to
provide incentives for industry and program officials to effectively
introduce alternatives in the proposal process as revisions or
substitutes for milspecs.  Our previously discussed December 1992
report noted that one reason reforms do not occur is that the basic
incentives or pressures that drive the participants' behavior in the
process are not changed.  Accordingly, changing incentives and
pressures is important for cultural change as opposed to coercive and
procedural solutions that attempt to make things happen without
necessarily affecting why they did not happen in the first place. 

The PAT recommends that all new high-dollar value solicitations and
ongoing contracts include a statement encouraging contractors to
submit alternative solutions to milspecs.  Tasks proposed to
implement the recommendation include policy changes to allow
contractors offering alternatives to milspecs the possibility of
additional profit or fees for new contracts and the negotiation of a
no-cost settlement for certain existing contracts.  A similar
recommendation was in the 1977 Defense Science Board report; however,
a 1993 Defense Science Board report pointed out that currently
"Government profit `guidelines' do not encourage contractors to
reduce costs since profit is a percentage of cost."\4 Also, some DOD
officials have questioned whether this recommendation provides more
incentives than the current program.  Accordingly, questions remain
as to whether this recommended action will adequately incentivize
contractors. 

In addition to providing incentives to contractors, DOD's program
envisions providing incentives to program managers.  One of the
recommended tasks is to issue a change in policy that encourages
program managers to select alternative solutions to milspecs by
allowing the program to retain a portion of any resulting savings. 
This was recommended in a 1987 study, but was not implemented. 


--------------------
\4 Report of the Defense Science Board Task Force on Defense
Acquisition Reform, July 1993. 


   AREAS TO BE FURTHER DEVELOPED
------------------------------------------------------------ Letter :5

Our review identified program areas that have not been fully
developed in this early stage of implementation.  Specifically, we
observed that (1) data on the benefits of implementing the
recommended actions were generally not available, (2) opportunities
for advancing acquisition reform goals had not been prioritized, and
(3) indicators were not adequate to measure progress toward intended
goals.  DOD officials acknowledged the need for further work in these
areas as implementation proceeds. 


      BENEFITS OF RECOMMENDED
      ACTIONS
---------------------------------------------------------- Letter :5.1

The PAT report and other reports assert that milspec reform will
result in dollar savings and other benefits that will more than
offset the additional funds required for reforms.  However, neither
the PAT report, the implementation plan, nor the Secretary's
memorandum provide much supporting data on dollar savings or other
benefits to be achieved. 

The PAT's charter specifically required the team to quantify the
benefits of recommendations.  Although 14 of the 24 recommendations
refer to expected savings or cost avoidances, the report provided
specific dollar benefits for only 2, and these were the savings
realized from limited implementation by a service or defense agency. 
OSD and service officials acknowledged that the PAT did not do much
to quantify benefits.  These officials stated that it was difficult
to identify costs and savings of the various actions involved in each
recommendation but conceded that this information should be
developed. 

DOD officials said that because many interrelated actions are being
implemented in addition to milspec recommendations, it is not
possible to identify the results of specific changes.  The July 1993
Defense Science Board report on Defense Acquisition Reform also
supports this view.  It cites case studies to show potential savings
by eliminating five elements that impose inefficiencies in the
current acquisition systems--unique government specifications,
processes, and practices being one element.  However, the examples
indicated that the five elements combined to cause the additional
costs of government items, and the savings from each recommended
change were not subject to precise calculation. 

During his press conference on milspec reform, the Secretary of
Defense stated that milspec reform was expected to increase DOD's
costs in the first year but to produce billions of dollars in savings
thereafter.  He cited the electronics area as having the potential to
produce savings of about $700 million.  DOD officials have not
identified any reliable data on costs and savings that support these
statements.  Identifying monetary savings could be critical to
achieving acceptance of the reform program by officials throughout
the acquisition community.  Prior efforts, such as the Defense
Management Review Working Group Initiative, reportedly failed
because, among other things, the services and defense agencies never
concurred with the initiative.  A DOD official, in commenting on the
draft PAT report, said that it would be helpful if the report
included some form of cost benefit analysis.  More details of
monetary benefits might be required if milspec reform is to be
successful because officials could be reluctant to commit scarce
resources if they are not convinced that the effort will produce
identifiable benefits. 


      IDENTIFYING BEST
      OPPORTUNITIES TO ACHIEVE
      GOALS
---------------------------------------------------------- Letter :5.2

Under its current milspec reform program, DOD has not prioritized
actions by identifying where the greatest needs and opportunities for
milspec reform exist.  Neither has it clearly differentiated the
types of acquisitions, classes of equipment, or sectors of the
industrial base to which each recommendation has the greatest
applicability.  The PAT charter tasked the team to evaluate the
impact of implementing its recommendations on major systems,
less-than-major systems, systems support equipment, spare and repair
parts, base support equipment, and supplies and consumables. 
Although the team addressed some of these areas, an overall
evaluation of the impact of the PAT recommendations on different
types of acquisitions, buys, or industrial sectors was not done. 

A more detailed evaluation would have been instrumental in
identifying where the greatest needs and opportunities for milspec
reform exist.  Comments received on a draft of the PAT report
indicate concern about the global nature of some of the
recommendations.  For example, one official noted that the report
proposes to apply a "grab bag" of practices to each and every program
without considering the specific needs of each program.  The official
said that this approach would harm the general acquisition process. 
The PAT response did not directly address these concerns but stated
that, among other things, the PAT recognized that the defense
acquisition process was very complex and that simple solutions
broadly applied are not the answer.  If all needed resources do not
become available, focusing on areas of high payoff might be needed. 

The limited examples of identified benefits appear to indicate that
the recommendations could meet varying levels of needs or provide
different benefits, depending on the industrial sector involved.  For
example, Defense Science Board reports issued in January 1987 and
July 1993 identify key industrial sectors, such as electronics, jet
engines, semiconductors, and transportation, as offering
opportunities for DOD to buy commercial products without using
milspecs.  The Secretary of Defense stated that in the electronics
area industry was so far ahead of DOD technologically that using
performance or commercial specifications for these items would
produce great benefits.  DOD's implementation plan does not target
this or other areas for priority attention. 

Identifying areas where the greatest opportunities are and
establishing the details on how DOD could apply recommendations to
different types of buys could be important in ensuring that
implementing officials clearly understand what is required and what
benefits are expected.  DOD officials told us that they are
developing tools for the services to use in identifying the greatest
opportunities.  They said that these tools include a questionnaire to
help users prioritize the areas of greatest opportunities for milspec
reform within the various DOD activities.  Also, they said that DOD
is establishing priorities for eliminating management and process
standards that have been tentatively identified by industries as
significant integration barriers or cost drivers. 


      INDICATORS TO MEASURE
      PROGRESS TOWARD GOALS
---------------------------------------------------------- Letter :5.3

DOD's milspec program calls for establishing indicators that monitor
the program's success in translating the reform policy into actions
and reducing costs and integrating the defense and commercial bases. 
DOD's implementation plan identifies 12 indicators, a reduction from
the approximately 50 individual ones listed in the PAT report.  In
addition, the plan states that an existing database will be expanded
to have automated data reporting for some indicators.  However, DOD
officials said that the expanded data was not viewed as cost
effective, and currently, they plan to expand data in only one
limited area.  An earlier milspec reform report noted that the
current DOD computer systems are not able to track some critical data
elements such as the volume of commercial items being bought, or the
number of items bought to milspecs as opposed to some other type of
specification. 

The majority of the indicators in the PAT report and the
implementation plan consist of determining whether an event has
occurred or counting the number or percent of selected documents,
such as milspecs or commercial standards, that are used.  For
example, on the recommendation regarding leadership, the PAT report
indicators include ascertaining if (1) the policy memorandum is
issued, (2) video conferences occur, and (3) progress reports are
submitted.  Indicators for other recommendations include the number
of (1) milspecs and commercial type documents used, (2) commercial
acquisitions, and (3) alternatives to milspecs proposed and accepted. 
These do not appear to measure whether DOD is progressing toward its
overall goals of reducing acquisition cost and time and integrating
the industrial bases. 

OSD officials recognize that the indicators are weak and are
currently working on developing better ones.  Although the PAT report
recommended that the Defense Standards Improvement Council monitor
progress, no other organization has yet been assigned specific
responsibility for developing improved indicators. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :6

We reviewed the April 1994 PAT report; the DOD's June 23, 1994,
implementation plan; and the June 29, 1994, Secretary of Defense
memorandum directing implementation of the PAT report.  We analyzed
the 24 recommendations in the PAT report, focusing on the 13
principal ones.  To see whether these recommendations were cited in
past studies, and whether resources, time frames, and progress
indicators were more fully addressed in the current program, we
compared the program with selected prior reports on milspecs and
acquisition reform.  To obtain more data about milspec issues and
changes that could occur under the reform program, we (1) visited
standardization activities and program offices at the Air Force
Material Command and Aeronautical Systems Center, the Army Materiel
Command and Aviation and Troop Command, and the Defense General
Supply Center and (2) interviewed officials from the services,
standards writing organizations, and industries. 

We conducted our work between November 1993 and August 1994 in
accordance with generally accepted government auditing standards.  We
did not obtain written DOD comments on a draft of this report;
however, we discussed our results with agency officials.  In general,
they concurred with our results and made some suggestions that have
been considered in preparing this report. 


---------------------------------------------------------- Letter :6.1

We are sending copies of this report to the Secretary of Defense, the
Deputy Under Secretary of Defense for Acquisition Reform, and
interested congressional committees. 

Please contact me at (202) 512-4587 if you have any questions
concerning this report.  Major contributors to this report are listed
in appendix III. 

David E.  Cooper
Director, Acquisition Policy, Technology,
 and Competitiveness Issues


RECOMMENDATIONS IN PAT REPORT
=========================================================== Appendix I

The following are the recommendations in the report entitled
Blueprint for Change:  Report of the Process Action Team on Military
Specifications and Standards, dated April 1994.  We identify the 13
principal recommendations with an asterisk (*). 

1.* All ACAT\1 Programs for new systems, major modifications,
technology generation changes, nondevelopmental items, and commercial
items shall state needs in terms of performance specifications. 

2.* Direct that manufacturing and management standards be canceled or
converted to performance or nongovernment standards. 

3.* Direct that all new high value solicitations and ongoing
contracts will have a statement encouraging contractors to submit
alternative solutions to military specifications and standards. 

4.* Prohibit the use of military specifications and standards for all
ACAT programs except when authorized by the Service Acquisition
Executives or designees. 

5.  Change current processes and procedures to ensure that
specifications and standards only list references essential to
establishing technical requirements. 

6.  Eliminate the current process of contractually imposing hidden
requirements through references listed in equipment/product
specifications or noted on engineering drawings. 

7.  Mandate cancellation or inactivation of new design obsolete
specifications and standards that have had no procurement history for
the past 5 years.  Cancel all unnecessary data item descriptions. 

8.* Form partnerships with industry associations to develop
nongovernment standards for the replacement of military standards
where practical. 

9.  Establish a process to include industry and government users
upfront in the specifications and standards development and
validation processes. 

10.  Assign specifications and standards preparation responsibility
to the Defense Logistics Agency for Federal Supply Classes that are
primarily commercial. 

11.* Direct government oversight be reduced by substituting process
control and nongovernment standards in place of
development/production testing and inspection and military unique
quality assurance systems. 

12.* Direct a goal of reducing the cost of contractor-conducted
development and production test and inspection by using simulation,
environmental testing, dual-use test facilities, process controls,
metrics, and continuous process improvement. 

13.* Assign Corporate Information Management offices for
specifications and standards preparation and use. 

14.* Direct use of automation to improve the processes associated
with the development and application of specifications and standards
and Data Item Descriptions. 

15.* Direct the application of automated aids in acquisition. 

16.  Use Distributed Interactive Simulations, Design to Cost and
Cooperative Research and Development Agreements to achieve aggressive
cost/performance trade-offs and dual-use capabilities. 

17.  Direct the establishment and execution of an aggressive program
to eliminate or reduce and identify the quantities of toxic
pollutants procured or generated through the use of specifications
and standards. 

18.* Direct revision of the training and education programs to
incorporate specifications and standards reform.  Contractor
participation in this training effort shall be invited and
encouraged. 

19.* Senior DOD management take a major role in establishing the
environment essential for acquisition reform cultural change. 

20.* Formalize the responsibility and authority of the Standards
Improvement Executives, provide the authority and resources necessary
to implement the standards improvement program within their
service/agency, and assign a senior official with specifications and
standards oversight and policy authority. 

21.  Use innovative approaches in the acquisition of weapon systems,
components, and replenishment items by using commercial practices. 

22.  Increase the use of "partnering" in contracts and program
management to improve relationships and communication between
government and industry. 

23.  Continue to encourage and assist contractors to use
activity-based costing in circumstances where the method could
improve cost allocations, bidding, and cost reimbursements. 

24.  Integrated Product Development will be the preferred risk
mitigation tool for all developmental acquisitions. 


--------------------
\1 ACAT refers to acquisition category and is used to establish the
level of review and decision authority for four categories of DOD
acquisition programs. 


SELECTED MILSPEC AND ACQUISITION
REFORM REPORTS
========================================================== Appendix II

Road Map for Milspec Reform:  Integrating Commercial and Military
Manufacturing, Report of the Working Group on Military Specifications
and Standards, Center for Strategic and International Studies, 1993. 

Acquisition Streamlining:  Specifications and Standards, DOD
Inspector General, Report 92-INS-12, September 21, 1992. 

Report of the Process Action Team on Procedures for Working Group 9
on Specifications and Standards Under the Regulatory Relief Task
Force of the Defense Management Review, August 1990. 

Report of the Process Action Team on User Feedback for Working Group
9 on Specifications and Standards Under the Regulatory Relief Task
Force of the Defense Management Review, October 1990. 

Enhancing Defense Standardization-Specifications and Standards: 
Cornerstones of Quality, Report to the Secretary of Defense by the
Under Secretary of Defense (Acquisition), (the Costello report),
November 1988. 

Use of Commercial Components in Military Equipment:  Final Report of
the Defense Science Board, 1986 Summer Study, January 1987. 

A Quest for Excellence:  Report to the President by the President's
Blue Ribbon Commission on Defense Management (the Packard Commission
report), June 1986. 

Report of the Task Force on Specifications and Standards, Defense
Science Board (the Shea Report), April 1977. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

David Childress
Stacy Edwards
Marion A.  Gatling

NORFOLK REGIONAL OFFICE

Dawn R.  Godfrey
Leslie M.  Gregor
Fred S.  Harrison

KANSAS CITY REGIONAL OFFICE

Lillian I.  Slodkowski

